The Business Rusch: Scarcity and Abundance

The Business Rusch: Scarcity and Abundance

Kristine Kathryn Rusch

For nearly two years now, I’ve been trying to find a succinct way to express how publishing is changing. So imagine my pleasure when I found the exact analogy that I wanted in John Seabrook’s New Yorker article, “Streaming Dreams,” about YouTube.

A few years ago, YouTube decided to make some structural changes to reflect the changing marketplace. It wanted to add premium content, including streaming video. To make the transition, it hired Robert Kyncl who had worked for both Hollywood and web-based companies like Netflix.

YouTube hired Kyncl to bridge the Silicon Valley culture of the web with the content-oriented culture of Hollywood. Of the two cultures, Kyncl said, “Silicon Valley builds its bridges on abundance. Abundant bits of information floating out there, writing great programs to process it, then giving people useful tools to use it. [The entertainment industry] works by withholding content with the purpose of increasing its value.”

He expanded what he meant by comparing television to YouTube. In television, “airtime is a scarce resource, and quality programming scarcer still, and expensive to create.” Programming gets sold to network and cable executives “who make decisions, in part, on their ‘gut.’”

On YouTube, “‘airtime’ is infinite, content costs almost nothing for YouTube to produce, and quantity, not quality, is the bottom line.” Or as one YouTube director said, “YouTube greenlights everything.”

Stop now, step out of the YouTube/traditional television model, and think of publishing.

What has gone on in publishing in the past few years is precisely the YouTube versus television conundrum that Kyncl talks about in this article.

Traditional publishing, like network television, is built on scarcity. In traditional publishing, “airtime” was shelf space. Only so many brick-and-mortar stores that carried books (of any type) existed. Those stores only had room for a certain amount of shelf space. Only a handful of books could fit face-out on those shelves. Several more could fit spine-out, but it’s harder to sell a book based on its spine than it is to sell a book based on the cover.

Because the shelf space is limited, traditional publishers only kept books with a fantastic sales record in print. The other books had a short shelf life before they were taken out of the stores and eventually out of print.

I called this the produce model, because I couldn’t think of any other way to express what was going on. Traditional publishers treated books like produce that would spoil because, in effect, sales do decline if a book has been out for a long time. (Sales don’t evaporate and in some cases, sales increase. But they will eventually plateau.)

A few years ago, our local independent bookstore got a new owner, a man who owns several used bookstores. He couldn’t bear to strip books of their covers and return them for full credit, so he kept the new books on the shelves for weeks, sometimes months. Readers soon discovered the problem with this model; we had no reason to go into the bookstore weekly to see the new arrivals, because he wouldn’t order new books until he had the shelf space.

Back in the olden days—all of five years ago—the produce model was the only viable model for brick-and-mortar stores with actual shelves.

Amazon had started making inroads in the produce model more than a decade ago, but it wasn’t until the decline in independent bookstores that traditional publishing realized what a force Amazon was.

Amazon had unlimited shelf space—the abundance model, to use Kyncl’s term. If a book existed, that book was probably available on Amazon. Only readers weren’t used to buying over the internet, so they preferred brick-and-mortar stores.

As brick-and-mortar stores became scarce, readers went to Amazon (and Powells.com and Barnes & Noble.com—places that had books on shelves, and with a click of a button, those books were purchased and mailed to the customer). Amazon in particular encouraged this thinking by making its website user friendly, by reducing prices to nearly nothing, and by working very, very, very hard to make the entire experience consumer-friendly.

When our local bookstore disappeared (victim to those policies mentioned above), I started shopping for books online with a lot more regularity. The nearest all-new bookstore was more than an hour away (now it’s two hours away), and I couldn’t get there every week. I tried B&N.com, but my orders got lost, shipped to the wrong address, or never fulfilled (and never refunded).

I turned instead to Amazon and—knock wood—have not had a problem with their ordering system in more than five years of getting books through them. (I like ordering from Powells.com as well, but they lack the selection that Amazon has. Still, that’s my go-to brick-and-mortar bookstore whenever I need to wander the shelves.)

Combining new and used, like Powell’s and Amazon do, make it possible to order most books, in print or out of print.

Slowly, online book retailers were training the consumer to expect the abundance model.

But the traditional publishers still thought in terms of scarcity.

In fact, their entire business is built on it. The limited shelf space caused other issues. Over the years, traditional publishers had developed an arcane system of selling books. From returns (producing two books to sell one) to the distribution network (not selling directly to bookstores, but selling directly to distributors instead) had created a lot of unnecessary costs. (I explained some of this history in a previous post that you can access here.)

By the middle of the previous decade, it cost at least $250,000 to publish a mid-list novel with a nice cover and an author advance of $10,000. At least $250,000, and often twice that amount. As in television, the cost of content was prohibitive.

And because traditional publishing, like television, deals in entertainment, success can’t be duplicated. Just because one book about elves becoming werewolves becomes a bestseller doesn’t mean all elven werewolf novels are guaranteed bestsellers. Traditional publishers, like television executives, often made decisions on which project to back based on their gut.

The more in touch a publisher was with readers (and not just that all-important Ivy League demographic, but real readers of all stripes), the more successful the company. Again, television provides a telling example. Whenever a network like ABC rose to the top for years on end, it was because an executive had a golden gut. That person could make decisions that millions of people agreed with.

That skill is rare and doesn’t always last, particularly when the executive or the publisher gets too wrapped up in the hothouse environment of the studio or the publishing company.

Kyncl had an amusing—and apt—observation about this very thing in describing the cultural bridge he was expected to extend between Silicon Valley and Hollywood. He told Seabrook that it made no sense at Google to bring “a gut-based decision-making process to a culture that is based on numerically quantifying everything. Ultimately, that kind of decision-making gets rejected, as if it were a foreign body.”

It is, in fact, the ultimate clash between scarcity thinking and abundance thinking. In abundance, you can toss anything into the mix, quantify its sales, and pick winners based on sheer numbers. In scarcity, you have to go with the best of what’s available, and hoping (praying) that you don’t lose too much money on everything else.

Everyone currently working in traditional publishing, from the publishers to the editors to the writers, learned the scarcity attitude. Everyone. That includes me. That includes any unpublished writer who tried to break in before 18 months ago. That includes agents. That includes book reviewers, copy editors, book editors, and the publishing executives.

Our attitudes got formed in a model based on limited shelf space and expensive production costs. On “gut” decisions instead of quantifiable decisions.

On the idea that rarity increases value.

Each book becomes precious. Each book needs time to produce. Each book must be perfect, because its debut on the world stage is brief, and its ability to capture an audience limited.

The very idea of abundance is confusing. How, everyone raised in scarcity wants to know, does anyone find anything? How can something become “big”?

People who come at publishing from the new world of publishing—always-available titles, e-books that might stay in print forever—understand the long tail. They understand that something may not be a hit when it first appears, but word of mouth (or an abundance of page views) will lead to a wider audience. That wider audience will then bring its friends and family to the table, introducing yet another new group of people to the item.

These two attitudes—scarcity thinking and abundance thinking—are greatly different from each other. In scarcity thinking, the bigger the audience, the better. Which means that items have to be geared toward a mass audience because you need to hit a home run one out of one hundred times.

Abundance thinking takes the pressure off each individual item. Instead of trying to appeal to millions with one item, appealing to thousands or even hundreds works just as well provided there are other items available from the same company/individual/provider. The other items don’t have to be similar to the first item (although it’s nice if there’s a grouping). Niche audiences communicate with each other, and slowly bring the fan base to the table.

Speed no longer becomes an issue.

Let me provide another analogy for those of us who were raised in traditional publishing. Most of us are old enough to have family members who survived the Depression. My parents did. In the Depression, my mother often went without meals, was funneled from family member to family member after her parents died, and could remember what it was like to do without damn near everything.

My father’s father had a good job, owned his own house, had relatives who owned a farm, and as a result, my grandmother didn’t have to work and neither did my father. His parents paid for his college education in the 1930s, and he never went without anything.

My parents had terrible arguments about money. My mother wanted to save it. My father believed in spending it for extras just to make life better.

I have a vivid memory of my mother saving bits of soap and combining those pieces to make a new bar. Of being told to clean my plate because food should never ever go to waste. Of her creative use of leftovers because my father refused to eat reheated meals and my mother refused to throw anything away.

I could go on. Anyone old enough to have Depression-era relatives knows those attitudes, and probably remembers how inexplicable those attitudes seemed in the 60s, 70s, 80s, and 90s, when this country had money in abundance.

Those of us raised in those years had our niches. We liked certain things and hated others, wasted a lot of stuff because it wasn’t to our taste, and reveled in minor things that seemed frighteningly unimportant to the Depression generation.

The folks who currently work in traditional publishing are—in this metaphor—the Depression generation. Raised in scarcity, used to operating with limited budgets and limited resources, creative within the confines presented by only so much shelf space.

The incoming indie writers and publishers, along with the online booksellers, live in a world of abundance. They see nothing wrong with hundreds, if not thousands, of titles for sale. As long as the consumer has a good search engine, the ability to sample, the “like” button, a “views” counter, and a sense of her own tastes, she will find the entertainment she wants.

She just might not find it in a “timely” fashion, at least according to old publishing produce models. She might discover a really good book fifteen years after it was first published. Then she might want to read everything that writer has finished.

I’ve noticed this among book bloggers. In the world I grew up in, no reviewer would ever review a title more than six months old. What was the point? The book would be hard to find, and the reviewer would have wasted a lot of wordage (and column inches) on something that would only make his readers angry because they couldn’t find the book in question.

Now, since so many of us have our backlists up, book bloggers review titles as they find the titles. Just this week, bloggers reviewed books I’d written ten, twelve, and fifteen years ago. Other bloggers reviewed some short stories published in magazines five years ago and now available as e-books. In the past, those stories would have been forgotten. Now they’re being read—not by millions of readers, but by hundreds in the past six months alone.

The shift from scarcity thinking to abundance thinking has started in traditional publishing. But, like anyone faced with a paradigm shift, traditional publishers are frightened. They know they have to rebuild their entire publishing model.

Fortunately for them, digital books have a high profit margin so they are not taking the financial hit that they expected when this change in publishing began. Still, these publishers don’t know how to think about the changes, can’t quite see what the impact will be, and often react out of the old thinking.

One way that they’re reacting, for example, is attempting to limit writers. By making their writers sign non-compete clauses in contracts, traditional publishers are trying to recreate the scarcity model. Unfortunately, they can’t. They might make one particular writer’s work scarce, but they won’t make other work scarce.

In an abundance model, scarcity looks like a mistake. Consumers who expect everything they want at their virtual fingertips get angry when they can’t get something. We’re seeing that a lot with traditionally published bestsellers. For a while, traditional publishers tried to release the e-books six months after the print books. All that did was anger the consumer, who wanted their e-book now.

Traditional publishers thought scarcity—the lack of an e-book—would drive consumers to the hardcover. Instead, it made the consumers so mad that they actually wrote nasty online reviews of the books in question. Not a nasty review of a book’s content, mind you, but a nasty review of the book’s lack of availability.

Writers raised in traditional publishing make similar mistakes. In the scarcity model, having a publishing contract equals security. Traditional publishing contracts were (are) rare, and were (are) hard to come by, so a writer who had one had achieved something major. Writers who had more than one contract over the years had managed to prove themselves valuable. In a world of limited resources, when a major company spent those resources on a writer, that writer knew she had value.

That’s why writers saw publishing contracts as validation. And, as traditional publishers tossed books out into the produce heap, the writer had to prove her value over and over again. Because every traditional publisher relied on gut instinct as much as numbers (if not more than numbers, since numbers are so unreliable throughout all of traditional publishing), intangibles like a good review in a respected publication (like The New York Times Book Review) added value. Again, a good review in a respected publication was rare, scarce, something that didn’t happen often.

But working off an abundance model, all of those intangibles mean less or nothing at all. In the past, the way that a reader discovered a book was pretty straightforward. The reader went to a bookstore and saw the book on the shelf. Sometimes a review pointed that reader to the book, but mostly it was simply visible in the store, and it was one of the few interesting things available in the finite book shelves.

For years, I used this analogy in my teaching. Every reader has acted like an editor, I would say. We’ve all done it. We’ve had $20 in our pockets and we’ve gone into an airport bookstore between connecting flights. We look at what’s available on the shelf. Sometimes we see a book we haven’t read by a favorite author and we plunk down our $20 without even looking at the back cover blurb.

But if we’ve read everything by that author, we pick up books by an author whose work we like sometimes and scan the back cover to see if it’s something we might enjoy. If it is, we buy it. If not, we move to the authors we’ve never read before, and we spend even more time on those books. We read the back cover, the opening paragraphs, a few pages out of the middle.

And sometimes we walk out of that airport bookstore with our $20 still in our pockets.

That was the scarcity model. We knew that sometimes we wouldn’t like what we saw, and we’d have to go without.

Now, though, with online bookstores and with e-readers, we can look and sample for free in abundance. No limits on the amount of books before us. We can use any kind of search paradigm we want to find books, whether we do it by genre or author or key word, publication date or positive reviews or page count, and then we can read a bit of the book before buying. We never have to leave that virtual bookstore empty-handed.

We never ever have to go without.

That blows the mind of anyone in traditional publishing. Even those of us who understand the new paradigm still have our minds blown on a regular basis. We get hit over and over and over again with fact that we now live in a world of unlimited books. There are more books available for my Kindle than I could ever read in a hundred lifetimes. I don’t even try.

But I know I can find the books I want, and even books that I never heard of, thanks to those algorithms developed by Silicon Valley. People who bought the same book you did bought other books you’ve never heard of. You click on those and you might find one you like. Or you search the top one-hundred sellers in romantic suspense novels featuring dogs in the plot.

You can do those things in a world of abundance. You can’t in a world of scarcity.

All those questions writers ask about how to get noticed in this new world? Those questions come from someone raised in scarcity. Being noticed was important because your moment on that shelf was—by definition—short-lived.

Writers who understand the long tail know that the way to get more readers is to have more available product. Abundance works, even for the single entrepreneur.

It’s becoming clear, as I read the publishing trade magazines, that some traditional publishers are starting to understand the long tail. They have begun to realize that they can participate in an abundant world.

But they’re still limited by scarcity. Only this time, the scarcity that ties their hands is a scarcity of funds. They might have access to backlist from every midlist author they’ve published in the past twenty years, but they don’t have the employees to upload those books—and they don’t have the unlimited funds it would take to hire those employees.

Still, these publishers can foresee a future when they might have the money, so they’re refusing to revert titles even though the books are no longer in print. Similarly, many agents see potential wealth in getting their authors to relinquish most of their backlist to the agent, often for a pittance. The agents are beginning to run into the scarcity issue as well—they don’t have the resources to publish their clients’ backlist, or don’t have the resources to do it well. But agents are used to farming out jobs they can’t do, and they’re moving on this more quickly than publishers.

Traditionally published writers are at a disadvantage here because in the past, publishers did everything for them. Writers have to learn how to be business people, and from what I’m seeing among the traditionally published, the ability to learn business is also a scarce resource. Writers who knew business usually didn’t thrive in traditional publishing, with its arcane traditions.

Right now, the tension we’re all feeling in publishing comes from these warring scarcity and abundance attitudes. Sometimes those of us in publishing are not even speaking the same language, even though it seems like we are.

We have to step back and see where our attitudes come from. Are we thinking of the limited amount of shelf space, of the handful of slots on the New York Times bestseller list, or are we thinking about making all of our work available for the long term and trusting search engines and algorithms to help readers find us? Are we trusting our gut or are we relying on math? Because, as Kyncl said, trying to reconcile these two attitudes is, at times, like interacting with a foreign body.

The digital landscape is changing entertainment. Not what we consumers want from our entertainment, but how we find it and consume it.

We need to accept that these changes have happened. Trying to place a stranglehold on that abundance and return to the culture of scarcity won’t happen, no matter how hard we try. We all need to learn how to survive in a world of abundance.

I’m still astonished at the number of people who come to my website every month. Not everyone comes for the business blog. Most people come for the free fiction on Monday. But a large number of you want to discuss business here.

The more fiction I write, the more money I make. Since I am a fulltime writer and have been for thirty-mumble years now, I have to pay attention to where my money comes from. So if this nonfiction blog ceases to support itself, I will eventually have to stop writing it.

I fund it through donations. So if you liked what you read here, please leave a tip on the way out.

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Those of us who have worked in both software and hardware manufacturing had already seen the abundance/scarcity dichotomy. We may not have understood it totally from the Publishing perspective, but we could see how it was likely to play out, because we could see how it was playing out in the software business (check Microsoft’s stock price over the last ten years).

It is interesting watching the panic going on. It really is. I’m not talking publishing, and I can’t talk about what I did see because the Non-Disclosure Agreement is still in effect, but it was totally freaking hilarious. People were running around like chickens with their heads cut off screaming THE SKY IS FALLING. I can’t tell you what happened, but we did end up making money. It came down to defining what the product actually was…

What the Publishers are going to want is price supports. That’s because they have that $250,000.00 cost to produce a book, and most independents have a cost of $0.00 to produce a book. The Publishers don’t think that this is fair.

We saw the same thing play out in Music, where the RIAA member companies screamed that they couldn’t produce an album for less than some ungodly figure (I forget what it was now) and the Indies were producing them for less than a $1,000.00.

The MPAA is complaining that they can’t produce good movies for less than 50 million dollars. The new Independent movie Iron Sky was produced for about 7 Million Euros. Compare that to John Carter, which cost 225 Million Dollars. I leave to you to decide which one is more likely to make a profit…

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